As this website focuses on Open Innovation, at first I should clarify my definition of open innovation.
A major part of the theoretical foundation of the open innovation paradigm was provided by Henry Chesbrough. Although the term was coined and popularized by Henry Chesbrough, the open innovation approach was shaped over a long time by different developments in the innovation economy like the lead user approach (User based innovation), Toolkits for user innovation and design, or Commmunity Based Innovation [cf. Piller, 2008].
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The evolution of the internet allowed the use of internet-based design toolkits. Extensive research has been made on toolkits for user innovation and design and mass customization. Simultaenously, the lead user approach was further researched. Under the influence of internet communities and open source software communities the community based innovation model was developed and researched.
The internet offered consumers a novel way to participate in their own consumption behaviors. The customer perspective was tremendously encouraged and liberated. Open source Software and Innovation Communities identified ways of user collaboration and user motivation which are now adopted in other fields. The term "Web 2.0" [O’Reilly, 2005] sketched the way how Blogs, Wikis and other trends in the world wide web changed the way of user interaction and participation. Software applications like Wikipedia enabled mass collaboration and formed a whole new concept of information organisation called "folksonomy". Other approaches like prediction markets and Crowdsourcing are based on the research on swarm intelligence and wisdom of crowds. Also marketing trends like viral, buzz or grassroots marketing postulate the new, strengthened position of the customer.
In order to describe these sociopolitical and economic-political changes several terms have evolved, like Attention Economy, Support Economy, Experience Economy and Innovation Economy. This overflow of analogical concepts and theories is increasingly confusing users, journalists and also scientific researchers.
Definition
In between all these trends, open innovation seems just as another, temporary hype. Although open innovation is affected by all these developments, it is still different from all these buzzwords. It identifies the common intention of these methods and describes the overall strategy and innovation model that these methods require. This means that open innovation is not a single technique to improve some aspects of the firm’s innovation process. Open Innovation describes a much broader concept than all other mentioned methods. Open innovation redefines the inbound-innovation-process by extending von Hippel [1988] sources of innovation by universities, suppliers and community based innovation. It is characterized by its porous innovation processes and the strong interaction with the environment. By integrating a large number of individuals into the innovation process a lot of new creativity and know-how is brought into the organization. This must not necessarily be a lead user or customer, von Hippel [1988] already suggested a lot of other innovation solvers.
But open innovation is not only about the inbound transfer of creativity and innovations through e.g. customer integration. The company can utilize their unused intellectual property through licensing of innovations on an intermediate market. Intermediate markets could also increase the number of markets where a technology might be used and therefore increase the total value of the innovation.
Terminology obscurities
The term "open innovation" was invented by Chesbrough [2003] to describe a innovation model based on a contract-based exchange of knowledge and innovations. But at the same time, we must also acknowledge the rise of open source software and their collaborative and open approach. As mentioned by Fredberg et al. [2008], several researchers refer to open innovation as a collaborative process between several different parties. The original meaning of open innovation as a marketplace for intellectual property ("market for ideas") is increasingly suppressed. Also other terms like Crowdsourcing or Community Based Innovation have a very similar meaning and are often used in the context of open innovation. Because of these obscurities, consequently some researchers call for further development of the terminology itself.
Commercialization & the role of the market
The essential difference between other models of collaboration like the open source model is the central role of a business model. Open source software tends to have no business model. But companies need to generate profit and therefore need a business model which is possible to create and capture value. Especially the market plays a major role as Open Innovation uses the market rather than the innovating company itself to source and commercialize innovations [West, 2007].
